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November 1, 2012

Safety and Prosperity

In this issue, Traders Magazine honors 15 "Wall Street Women" who have been leaders in skillfully guiding the securities trading industry to greater prosperity.

They have done this on merit and, to a great degree, through perseverance.

As fate would have it, a new study of that perseverance was published in June by Duke University Press. The work is titled, coincidentally, "Wall Street Women."

Author Melissa S. Fisher finds that even after decades of women trying to break into this particular men's club, the financial services industry has the widest wage gap between genders of any profession: 55 cents to 62 cents for every dollar made by the male gender. That compares to the all-industry average of 77 cents.

But that can be considered advancement over the past four decades. By Fisher's account, the entrance exam for Merrill Lynch's broker-trainee program in 1972 included the question: "When you meet a woman, what interests you most about her?"

The correct answer: "Her beauty." Trainees lost points if they answered "Her intelligence." Perhaps not surprisingly, a discrimination lawsuit soon ensued, when a woman who earned a master's degree in economics at Stanford University was passed over for a broker's job in favor of a college dropout and a former gas station attendant.

Interestingly, this is the second time a Fisher has written a book on "Wall Street Women." The first came in 1992, from a former Fortune editor named Anne B. Fisher.

Those were the days when Elaine Garzarelli of Shearson Lehman Hutton, Susan Byrne at Westwood Management and Brenda Landry of Morgan Stanley were big names on the Street.

"You wouldn't believe how men doubt that a woman can do anything with numbers," Garzarelli said in the book.

This is the woman who correctly called the Crash of 1987. So how did she get money managers to listen to her?

"I had to take each and every one of those guys out to dinner, and just keep explaining and explaining and explaining. ... And I'm talking about 350 clients," she said.

Men should be listening more, now. As Michael Lewis notes in "Boomerang," his latest account of man-made financial disasters, Icelanders-or Icelandic men, anyway-took 1,100 years to discover they had "natural gifts" in finance, not just fishing.

In the run-up to the credit crisis, the Netherlands put $305 million into Icelandic banks. Sweden added $400 million. Then came the German banks with $21 billion and United Kingdom investors with $30 billion.

When all was said and done, Iceland's banks went down. Standing at the head of government to pick the economy back up was Johanna Sigurdottir. One of the few profitable financial businesses left in Iceland after the banking debacle is headed by Kristin Petursdottir. The business is run entirely by women, seen as an advantage.

The point: Men often suffer from a "false faith in their own financial judgment," as Lewis puts it. Women, entrusted with money, take more care with it. Prosperity must come with a strong dose of safety.

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